The college-is-a-bubble meme just keeps growing. Student-loan debt surpassed credit-card debt for the first time in history last year. Tuition is rising at three times the rate of inflation, and there are growing concerns about the quality of education offered at even our nation's fanciest schools. Meanwhile, prominent venture capitalist Peter Thiel is paying young entrepreneurs to drop out of school. It's become more fashionable than ever to equate higher education with homeownership: once a rock-solid piece of the American Dream, now a fool's bet and a sad reminder of overinflated expectations.
But in reality, demand for an American-style college education, and the long-term value of said degree, is unlikely to decline any time soon. Here's why:
- College degrees are still relatively scarce in the U.S. Less than 30 percent of the population have BAs, and we're 12th in the world in the rate of young workers that have associate's degrees or more. President Obama's goal is to increase the percentage of young people with some kind of postsecondary certification to 60%.
- Global demand for education keeps growing--it's on track to double over the next 10 years, to over 225 million students worldwide. According to UNESCO, India would have to build a new campus every two weeks between now and 2025 just to meet the demand. And the U.S. model is still the most desirable internationally. U.S. private universities are expanding overseas from Abu Dhabi to Singapore to meet this growing global demand.
- As Kevin Carey of Education Sector points out in this column, a college degree, unlike a home, is nontransferable. It can't be flipped. Nor can it be foreclosed on. Student loan borrowers can go into default, which can in extreme cases actually negate the positive salary impact of their degree, but this is still pretty rare.
Of course, there are always going to be outliers who are entrepreneurial enough, creative enough, talented enough, or geeky enough to succeed without a college degree. And the better our economy gets at recognizing that talented tenth, the stronger, more innovative, and flexible we're going to be. Open education resources like Khan Academy and reputation-based networks like Behance and Github can go a long way toward giving colleges a run for their pricey tuition money, opening up the market for providing both learning and job-market signaling for free or at very affordable prices.
The other place the college-is-a-bubble meme might do some good is in the for-profit education sector. Dogged by persistent allegations of financial fraud and misleading recruitment practices, as well as increasing regulatory pressure from the federal government, the industry, a darling of the venture market just three years ago, has been weathering diving stock prices over the past year. These colleges, which enjoyed a decade of soaring enrollment with little or no oversight into the quality of education they provide, really do deserve the title of subprime.
Numerous studies have shown that higher education gives the biggest edge not to the type of privileged young go-getters that Thiel is recognizing, but to the children of immigrants, or those who are the first in their families to go to college. These are the very students who are more likely to end up at a University of Phoenix, DeVry, or Kaplan. If we question the value of a college degree, it should be on their behalf.
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